The Daily Shot: 23-Jun-21
• The United States
• The United Kingdom
• The Eurozone
• Japan
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Rates
• Global Developments
• Food for Thought
The United States
1. Existing home sales continue to lose momentum, with the May figure nearing 2016 levels. The second chart shows cumulative year-to-date sales.
Home prices are soaring, …
Source: Chart and data provided by Macrobond
… and inventories remain depressed.
Source: Mizuho Securities USA
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2. The Richmond Fed’s manufacturing report topped market estimates as new orders surge (2nd chart).
• Manufacturers are rapidly boosting wages, …
… as the hiring plans index hits a record high.
• The “supplier delivery times” index is still extraordinarily high but appears to have peaked, …
… which is also the case in other regions of the country.
Source: @benbreitholtz
The “backlog of orders” index has also peaked.
But inventory declines have accelerated.
• Price indices are peaking as well.
Source: Chart and data provided by Macrobond
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3. Bosses are at work, but workers have not returned yet.
Source: Yardeni Research
Will terminating the emergency unemployment benefits remedy this situation? Job search data suggest not.
Source: @GregDaco, @indeed, @JedKolko
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4. Fiscal and monetary policy has not been this coordinated since World War II. But the US could soon face a declining fiscal and monetary impulse.
Source: Quill Intelligence
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5. Air travel continues to rebound, putting pressure on understaffed airlines and TSA.
Source: Chart and data provided by Macrobond
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The United Kingdom
1. Industrial orders are surging, …
… and so are prices.
Source: Reuters Read full article
We should see a substantial jump in industrial production.
Source: Pantheon Macroeconomics
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2. Government borrowing has been massive but lower than expected. The second chart shows cumulative borrowing for each fiscal year.
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The Eurozone
1. Italian industrial sales surged in recent months.
2. Eurozone consumer confidence is above pre-COVID levels.
Source: @markets Read full article
3. This chart shows the ECB’s GDP and inflation projections with a couple of scenarios.
Source: ECB Read full article
4. Job postings continue to climb.
Source: @TonyCarterJones, @FT Read full article
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Japan
1. The yen has been trending lower vs. USD.
2. Manufacturing growth slowed in June, while services remain in contraction territory (PMI < 50).
3. Industrial production has been outperforming the US and Eurozone. However, despite economic improvements, BlackRock expects the Bank of Japan to remain highly accommodative for the foreseeable future.
Source: BlackRock
4. Department store sales are moving in the wrong direction.
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China
1. Container shipping costs continue to surge.
2. China has regained US import market share.
Source: Gavekal Research
3. Hong Kong’s consumer inflation remains subdued.
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Emerging Markets
1. Brazil’s short-term bond yields keep climbing, as the market prices in more rate hikes.
2. It’s been a good year for Argentina’s exports as commodity prices surged.
3. Hungary’s central bank hiked rates for the first time in years.
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Cryptocurrency
1. Once again, Bitcoin held support at 30k.
2. After a massive decline, DeFi tokens also appear to have stabilized (for now).
Source: CoinMarketCap
3. The number of Bitcoin and Ethereum active addresses has declined over the past few months, indicating slower blockchain activity.
Source: Glassnode Read full article
4. Bitcoin futures open interest dropped by more than half in two months.
Source: Arcane Research Read full article
5. MicroStrategy’s most recent $500 million bond used to finance additional purchases of Bitcoin dropped below par amid the crypto selloff.
Source: CoinDesk Read full article
6. Crypto miners have contributed to graphics chip (GPU) shortages, as prices followed Ethereum higher (GPUs are used for parallel processing).
Source: @adam_tooze, The Economist Read full article
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Commodities
US milk futures tumbled in recent weeks amid ample supply.
Source: Wisconsin Farmer Read full article
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Energy
1. The Brent – Dubai crude oil spread is approaching multi-year highs (more on the topic here).
h/t @iamsharoncho
2. OPEC’s market share is expected to expand in the decades ahead as tight oil production peaks.
Source: @financialtimes Read full article
3. European natural gas is hitting multi-year highs, which should further boost LNG prices.
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Equities
1. Stocks continue to rally, …
… with the Nasdaq Composite hitting a record high.
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2. Equity fund inflows have been impressive.
Source: @ISABELNET_SA, @BofAML
3. There is a big gap in returns on equity (ROE) and valuations between the US and the rest of the world (ROW).
Source: MRB Partners
But the US outperformance may have peaked.
Source: MRB Partners
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4. In the past year, the inverse correlation between the dollar and the US equity market has strengthened.
Source: Morgan Stanley Research
5. Despite negative Treasury returns and a positive correlation with stocks this year, a 60/40 allocation has still mustered a Sharpe ratio close to one, according to Cornerstone Macro.
Source: Cornerstone Macro
6. The ratio of global equity market capitalization to world GDP is at record highs.
Source: MRB Partners
7. This chart shows investors’ sector allocations relative to historical averages (Evercore ISI survey).
Source: Evercore ISI
8. Actively managed ETFs took off this year.
Source: @markets Read full article
9. The CBOE Skew index remains elevated, pointing to strong demand for downside protection.
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Rates
1. The Fed is fully absorbing all the new Treasury supply at this point. The situation will change once the US Treasury exhausts its cash balances.
Source: Deutsche Bank Research
2. BlackRock views the latest update to the Fed’s inflation projection as a catch-up to account for past undershoots of the 2% target.
Source: BlackRock
3. In recent decades, the Fed has not been able to raise rates above the natural rate of interest (r*). That’s why estimating r* is so important.
Source: Cornerstone Macro
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Global Developments
1. Here is a look at asset performance year-to-date.
Source: BlackRock
2. Higher US real yields relative to China’s economic surprise index point to a recovery in the dollar this summer.
Source: BCA Research
3. Semiconductor delivery delays are worsening, …
Source: @tracyalloway, @ianmking Read full article
… pushing chip prices higher.
Source: @WSJ Read full article
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4. The number of Bloomberg stories about inflation has surged this year.
Source: Morgan Stanley Research
5. Inflation-adjusted global goods trade continues to climb.
Source: Capital Economics
6. Home price increases have accelerated in many economies.
Source: Oxford Economics
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Food for Thought
1. US property taxes by county:
Source: @TaxFoundation Read full article
2. Corporate tax rates around the world:
Source: @howmuch_net Read full article
3. Changes in US labor force participation rates:
Source: BCA Research
4. Deaths due to long working hours:
Source: Statista
5. Fraudulent emergency unemployment benefits claims in New York:
Source: @axios Read full article
6. Top 50 fast-food chains:
Source: @chartrdaily Read full article
7. Where do you charge your electric vehicle?
Source: Deloitte Read full article
8. Tech companies’ revenue per minute:
Source: Finbold.com Read full article
9. Can hydrogen be used as fuel in aviation?
Source: @WSJ Read full article
10. Gen-Z mobile social users, by platform:
Source: Insider Intelligence Read full article
11. Favorite entertainment activity:
Source: Deloitte Read full article
12. Nostalgic comedy viewing:
Source: Statista
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